CSR stands for Corporate Social Responsibility.
The European Commission defines CSR as “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis”.
In short, CSR is centered on the idea that businesses have a responsibility to benefit the society that they exist within—a broader view than the one that says businesses’ only responsibility is to produce economic profit.
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Corporate social responsibility is a form of self-regulation and can be highly individualized; CSR strategies and activities will vary according to the company in question.
CSR activities are generally not mandated— even though there are more and more regulations on CSR – they are voluntarily undertaken by companies to assess and mitigate impact on society and the environment, as well as to give back to society and reap the benefits associated with creating positive social value (such as improved risk management and higher employee engagement).
CSR practices are often guided by a concept called the “Triple Bottom Line,” which encompasses economic, environmental, and social imperatives in the journey towards positive impact.
CSR categories (and subcategories) may differ depending on the regulating body and/or the corporation in question, and classification has changed over the course of time. However, the three broadest and most generally accepted categories are: environmental, social, and economic.
Note that while these categories are distinct, they are not mutually exclusive. There are often areas of overlap among the four categories.
Examples of CSR considerations
Individual CSR frameworks may also independently establish categories.
For instance, the ISO 26000 identifies seven core subjects (see below), as well as seven key principles focusing on accountability, transparency, ethics, stakeholder interests, human rights, laws and norms.
Organizations sometimes create guiding principles (sometimes conflated with CSR responsibilities) for CSR activity.
Note that as with the CSR categorization of responsibilities, there is some variance in which principles are selected. According to research by Crowther and Aras (2008), some basic principles are:
In line with the United Nations’ definition of sustainability—using resources in such a way that future generations may continue to benefit from those same resources.
Recognition and acceptance of the fact that the corporation has an impact on its external environment, and a responsibility for the effects of its actions.
Accountability also implies a commitment to quantification and reporting out of impact. Crowther and Aras further define characteristics of good reporting; it must be:
All relevant information—ie. relating to the effects of the corporation’s actions—should be readily apparent and not misleading.
In 2014, the European Parliament adopted provisions that required some companies (with over 500 employees) to disclose information on their CSR operations and activities, making impact reporting a clear obligation along with the standard financial reporting.
At the time, the three key EU regulations on sustainability disclosure were the EU Taxonomy, the Sustainable Finance Disclosure Regulation (SFDR) and the Non-Financial Reporting Directive (NFRD).
These regulations defined scope of reporting and required activities, with some overlap between the three regulations.
In 2021, the European Commission (EC) adopted a proposal for a Corporate Sustainability Reporting Directive (CSRD) that amended reporting requirements of the NFRD and effectively updated the directives of the aforementioned regulations.
Key things to know about the CSRD proposal is that it:
In light of sobering climate change statistics—the IPCC reports that many extreme weather developments are irreversible now—more and more corporations are recognizing various social and environmental issues as material and are increasing efforts to address and prioritize such topics.
The recognition and perhaps increased commitment to the Triple Bottom Line are evident in larger numbers of corporations attending recent global summits such as COP26 and the IUCN Congress.
The heightened scrutiny of issues that fall within the purview of CSR has led to an evolution in the sort of CSR expertise required.
Companies are now diversifying with CSR experts; as the field of CSR continues to expand, CSR professionals are increasingly specializing in specific topics and are hired to work on dedicated topics, rather than needing to serve as general advisor for all CSR issues.
Some of the biggest issues currently include climate change, biodiversity, and human rights/labor rights.
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